Re: What can you do with a 12-million-digit prime number? | csmonitor.com

[David Farber <dave () farber net>]

Begin forwarded message:

From: qx49 () comcast net (Wulf Losee)
Date: October 1, 2008 9:59:20 PM EDT
To: dave () farber net, "ip" <ip () v2 listbox com>
Cc: David Farber <dave () farber net>
Subject: Re: [IP] Re:   What can you do with a 12-million-digit prime  
number? | csmonitor.com

Dave:
I think that Steve Lamont's lament about the lack of basic math skills  
causing the housing bubble is at best misguided -- and it shows that  
basic reasoning skills are as lacking in the mathematically educated  
as much as they are with the innumerate masses ;-)

Lamont said:
> Basic math, the kind you learned in high school, would have told
> buyers that they weren't going to be able pay the now exorbitant
> mortgage interest rates.

Basic math wouldn't have helped. But I doubt that, if statistical  
arbitrage, quantative analysis, and computational finance were offered  
by our secondary schools, that people would be any better off. After  
all, it was "the Quants" of Wall Street -- the math majors -- who  
really screwed up by mistaking models for reality.

But back to basic math and mortgages -- If you were betting that  
interest rates were going to go down, and the economy was going to  
continue to boom (along with your income), then a variable rate  
mortgage would seem like a reasonable bet. It's got nothing to do with  
math, but everything to do with probability (and people's innate  
belief that the past is an indicator of future performance).

Moreover, I don't think Mr Lamont really understands what the author  
meant by "factoring". Factoring in financial lingo is when a business  
sells its accounts receivable at a discount -- which is basically what  
the mortgage brokers were doing with their the revenue stream from  
their loans.

Finally, linear equations *certainly* couldn't describe what happens  
during a financial bubble. This is the realm of non-linear equations  
and chaos theory.

Ironically, Mr Lamont doesn't seem to realize that trying to reduce  
the behavior of the world into simplistic paradigms is what got us  
into trouble in the first place.

best regards,
--Wulf


-------------- Original message ----------------------
From: David Farber <dave () farber net>
> Begin forwarded message:
>
> From: Steve Lamont <spl () ncmir ucsd edu>
> Date: October 1, 2008 2:13:35 PM EDT
> To: dave () farber net
> Subject: Re: [IP] What can you do with a 12-million-digit prime
> number? | csmonitor.com
>
> > What can you do with a 12-million-digit prime number?
> > By Andrew Heining | 09.30.08
> >
> > [. . .]
> >
> > Besides keeping your identity secure, primes have long been used as a
> > math shortcut, helping with factoring, linear equations, and other
> > things you probably haven't thought about since high school.
>
> This passage strikes me as incredibly sad and disturbing.
>
> In dismissing "factoring [and] linear equations" as things "you
> probably haven't thought about since high school", the author of this
> piece perhaps unintentionally explains why a number of things in
> modern life seem to have gone badly wrong.
>
> A little knowledge of basic mathematics, for example, might have
> prevented or at least ameliorated the current crisis in the financial
> markets.  The inability to understand and use numbers and simple
> equations or formulae and the critical thinking skills which go with
> them is probably partly at the root of buyer's lack of understanding
> of their now exploding mortgages.
>
> Basic math, the kind you learned in high school, would have told
> buyers that they weren't going to be able pay the now exorbitant
> mortgage interest rates.
>
> Basic math, the kind you learned in high school, would have the buyers
> of those mortgages that they were buying into a Ponzi scheme which
> would come crashing down on their heads.
>
> I'm sure readers of this list can think of more examples.
>
> Math. . . it isn't just for High School any more.
>
>                                                         spl
>
>
>
>
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